Understanding Your Credit Report

Your credit rating is a measure of the risk you pose to a lender when you borrow money. Your credit rating will help determine whether or not you qualify for a home loan, how much you will be charged in interest and fees, and how much you can borrow.

Your credit rating is affected by your credit history, your debt-to-income ratio, your LTV ratio, and your employment history.

Your Credit History and Credit Report
Your credit history, obtained through your credit report, is a record of how you have paid money that you owed. Your credit history will be negatively affected by late payments, too much open credit, too much debt, too many credit checks, collections or judgments against you, and of course, bankruptcies. To lenders, your recent payment history is the most important aspect of your credit report.

Since your credit score is greatly affected by your credit report, it is very important to make sure there are no mistakes in the report before you submit a loan application. The following three major credit reporting agencies can help you obtain a copy of your credit report:

Equifax: 800-685-1111
Experian (formerly TRW): 888-397-3742
TransUnion: 800-916-8800

If your credit report does contain inaccurate information, the credit bureau is required to investigate items that you dispute. Those companies furnishing inaccurate information to the credit bureaus must also reinvestigate items that you dispute. If you still dispute the credit bureau's account after a reinvestigation, you can include a note in your credit report that disputes the payment. (Another type of note that you can include in your credit report can explain why you were delinquent in paying past bills.)